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St. Jude Reiterated at Neutral - Analyst Blog

On May 9, we retained
St. Jude Medical Inc.
(
STJ
) at Neutral, following its first-quarter results. In spite of a
declining top line due to difficult end-market pressures, the
company was able to maintain its bottom-line growth.

Why the Retention?

On Apr 17, St. Jude posted first-quarter 2013 adjusted earnings
per share of 92 cents, which was in line with the Zacks Consensus
Estimate. It transcended the year-ago earnings by 7%. Revenues
dropped 4% (down 3% in constant currency) year over year to
$1,338 million and missed the Zacks Consensus Estimate of $1,368
million.

The company's earnings have managed to beat the Zacks Consensus
Estimate in 3 out of the last 4 quarters with an average surprise
of 1.95%. It managed to meet the Zacks Consensus Estimate in the
last reported quarter. Following the earnings release, the Zacks
Consensus Estimate for 2013 and 2014 remained unchanged at $3.70
and $3.95, respectively.

St. Jude's declining top line with all segments reporting
disappointing results (except the Atrial Fibrillation segment)
remains a cause of concern. The core Cardiac Rhythm Management
(CRM) division continues to face multiple headwinds. We remain
cautious about increased competition, pricing pressure, softness
in CRM and cardiovascular sales along with currency fluctuations.

However, management is confident that new products in 2013 will
drive long-term growth for the company. We are also encouraged
with St. Jude's restructuring and cost saving measures, which are
helping to maintain the bottom line.

Other Stocks to Consider

St. Jude has a Zacks Rank #3 (Hold). While we remain on the
sidelines regarding STJ, medical stocks such as
Conceptus
(
CPTS
),
TG Therapeutics
(
TGTX
) and
AtriCure
(
ATRC
) warrant a look. While Conceptus carries a Zacks Rank #1 (Strong
Buy), the other two stocks carry a Zacks Rank #2 (Buy).

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